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Nissan CEO Makoto Uchida rules out closer capital ties with Renault

YOKOHAMA — Nissan is committed to its automaking alliance with Renault but will not look to deepen its capital ties with the French automaker any time soon, its new CEO said on Monday. On his first day in the new position, chief executive Makoto Uchida also pledged to repair profitability at Japan's No. 2 automaker and said setting realistic targets would be key toward that goal, as it tries to make a clean break from the leadership of former chairman Carlos Ghosn. "Closer capital ties with Renault are not a focus in the short term," he told reporters. Uchida became CEO of Nissan on Dec. 1, as the car maker tries to recover from a profit slump and draw a line under a year of turmoil after the Ghosn scandal. The ousted chairman is fighting financial misconduct charges in Japan. One of the new CEO's big tasks is to salvage ties with Renault, which have deteriorated since Ghosn's ouster as chairman of both companies. Renault holds a 43.4% stake in Nissan after it saved the Japanese automaker from financial ruin two decades ago, and has pushed for the two companies to merge. In rejecting a notion of a merger with Renault, Uchida, 53, echoes his predecessor Hiroto Saikawa, who stepped down in September. He added that the alliance must re-think how it can serve all of its three members, which also includes Mitsubishi Motors. "The alliance has to benefit each of its partners in terms of revenue and profit," he said. "We need to re-evaluate what has worked and what hasn't worked in the alliance in the past few years." The CEO called for Nissan to set "challenging but achievable" targets, adding that this and the launch of more new car models and vehicle technologies would be key to its financial recovery. Nissan is bracing for its lowest annual profit in 11 years and has slashed its dividend by 65%. Its struggles come at a time when car companies desperately need scale to keep up with sweeping technological changes like electric vehicles and ride-hailing. "Somewhere along the way we created a culture of setting targets which could not be achieved," Uchida said, adding that this had resulted in a focus on short-term results. "Years of this had led Nissan to its current "difficult situation," he said, using heavy vehicle discounting in the U.S. market as an example of how aggressive sales targets to grow market share had deteriorated the company's brand.

FCA-Renault merger faces tall odds delivering on cost-cutting promises

FRANKFURT/DETROIT — Fiat Chrysler Automobiles and Renault promise huge savings from a mega-merger, but such combinations face tall odds because of the industry's long product cycles and problems translating deal blueprints into real world success, industry veterans told Reuters. BMW's 1994 purchase of Rover, and Daimler's 1998 merger with Chrysler both made sense on paper. The companies promised to hike profits by combining vehicle platforms and engine families. Both combinations proved unworkable in reality, and were unwound. Renault and Nissan, which have been in an alliance since 1999 designed to share vehicle components, have only managed to use common vehicle platforms in 35% of Nissan's products despite an original target of 70%, according to Morgan Stanley. FCA and Renault have raised the stakes for themselves by ruling out plant closures. That increases the pressure to achieve more than $5 billion in promised annual savings from pooling procurement and research investments. The two companies have yet to fill in many of the blanks in the merger plan put forward by Fiat Chrysler. Renault's board is expected to act soon to accept the proposal, but that would lead only to a memorandum of understanding to pursue detailed operational and financial plans. A final deal and the legal combination of the two companies could take months to complete if all goes well. Pressure to cut automotive pollution is driving the latest round of consolidation. Automakers are looking at multibillion-dollar bills to develop electric and hybrid cars and cleaner internal combustion engines. Fiat Chrysler and Renault are betting they can design common electric vehicle systems, then sell more of them through their respective brands and dealer networks, cutting the cost per car. Developing all-new electric vehicles can bring more opportunities to share costs from the outset, industry experts said. "With the emergence of connected, autonomous, electric and shared vehicles, carmakers face immediate investments, so new opportunities for sharing costs have emerged," said Elmar Kades, managing director at Alix Partners. However, most electric vehicles lose money. This is a challenge for city car brands in Europe in particular. Both Renault and Fiat rely heavily on this segment for sales.

FCA-Renault revival may hinge on willingness to cut Nissan stake

Fiat Chrysler Automobiles and Renault are looking for ways to resuscitate their collapsed merger plan and secure the approval of the French carmaker's alliance partner Nissan, according to several sources close to the companies. Nissan is poised to urge Renault to significantly reduce its 43.4% stake in the Japanese company in return for supporting a FCA-Renault tie-up, two people with knowledge of its thinking also told Reuters. It is still far from clear whether any concerted effort to revive the complex and politically fraught deal can succeed. FCA Chairman John Elkann abruptly withdrew his $35 billion merger offer in the early hours of June 6 after the French government, Renault's biggest shareholder, blocked a vote by its board and demanded more time to win Nissan's backing. Nissan representatives had said they would abstain. The failure, which FCA and Renault blamed squarely on the French government, deprived both companies of an opportunity to create the world's third-biggest carmaker with 5 billion euros ($5.6 billion) in promised annual synergies. It also shone a harsh light on Renault's relations with Nissan, which have gone from frayed to fried since the November arrest of former alliance Chairman Carlos Ghosn, now awaiting trial in Japan on financial misconduct charges he denies. REVIVAL TALKS Italian-American FCA — whose brand stable encompasses Fiat runabouts, Jeep SUVs, RAM pickups, Alfa Romeo luxury cars and Maserati sports cars — has so far turned a deaf ear to suggestions by French officials that its merger proposal could be revisited. But since the breakdown, Elkann and his French counterpart Jean-Dominique Senard have had talks about reviving the plan that left the Renault chairman and his Chief Executive Thierry Bollore upbeat about that prospect, three alliance sources said. Renault and a spokesman for FCA declined to comment. One of Elkann's senior advisors on the Renault merger bid, Toby Myerson, was expected at Nissan headquarters in Yokohama on Monday for exploratory discussions with top management, two people with knowledge of the matter said. Nissan CEO Hiroto Saikawa is likely to attend. Myerson did not respond to a message from Reuters seeking comment. The meeting comes amid mounting strains that may preclude compromise, after Senard warned Saikawa that Renault was prepared to block key Nissan governance reforms in a dispute over board committees.